Coinbase, one of the largest cryptocurrency exchanges in the world, has emerged victorious in a proposed class action lawsuit alleging illegal token sales. A proposed class-action lawsuit was filed in a US District Court in October 2021 and sought damages that consumers claim they incurred when buying or trading assets without registering the platform with the US Securities and Exchange Commission. This ruling is a significant victory for Coinbase and will likely set a precedent for other similar cases.
Coinbase (NASDAQ: COIN) Class Action Lawsuit Claims
A proposed class action lawsuit was filed against Coinbase (NASDAQ: COIN) for allegedly promoting the sale of tokens in violation of US securities laws. It claims Coinbase promoted the sale of tokens by providing users with descriptions and information about their value, as well as participating in promotions, providing updates on cryptocurrency price movements, and linking to web content.
Why The Proposed COIN Class Action Lawsuit Was Dismissed
U.S. District Judge Paul Engelmayer recently dismissed a proposed class action lawsuit against Coinbase, which accused the company of illegally selling 79 tokens on its platform. Coinbase’s customers claimed that they had been misled and had suffered losses.
The lawsuit further accused Coinbase of promoting the tokens by describing their purported value proposition and participating in “airdrops” of free tokens without registering as a securities exchange or broker-dealer. The customers sought damages for their losses and transaction fees incurred due to the alleged Coinbase illegal token sale.
However, Engelmayer found they could not prove that Coinbase held title to the tokens they had traded, nor could they show that Coinbase had actually sold them. Nor did Coinbase actively solicit investments.
Interestingly, a judge in the same court recently dismissed a similar lawsuit against Binance, finding that the claims were filed too late and that US securities laws didn’t apply because Binance is not a domestic exchange.
What This Means For The Crypto Industry
U.S. District Judge Engelmayer recently dismissed a proposed class action lawsuit against Coinbase, the cryptocurrency exchange and trading platform, in which the plaintiffs had claimed that the company illegally sold tokens in violation of securities laws.
This decision has the potential to be incredibly beneficial for the crypto industry. It means that cryptocurrency exchanges may now not be fearful to operate without fear of being sued for selling unregistered tokens. This decision could potentially lead to more exchanges offering more tokens and services to customers, creating more opportunities for market participants to participate in this burgeoning industry.
Ultimately, this decision sets an important precedent for future crypto-related lawsuits. While it is still unclear what the long-term implications of this ruling will be, one thing is certain: Coinbase’s successful defense against allegations of illegal token sales marks an important victory for cryptocurrency exchanges and their ability to operate within the bounds of U.S. securities laws.